coming up, we continue our discussion on federal spending and the national debt. max richtman on the national committee to preserve social security and medicare joins us this hour. after that, pete sepp of the national taxpayers union. jerome powell from the national policy center takes your calls. [captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute] host: debt talks continued this week with observers said discussion have reached "a critical stage." president obama up the ante, according to papers, saying the two sides have a unique opportunity to do something big. the president invited negotiators to the white house thursday. the white house will continue working on a 2012 -- house this week will be working on a 2012 budget for the pentagon.

good morning this wednesday, july 6. we will begin this morning would getting your thoughts on the job market ahead of friday's much- anticipated unemployment report. here is how we will divide the lines -- u.s. jobs market, what is your experience? here is "the baltimore sun." stocks hang on the unemployment report. early in the article it says -- further in the article, it says --

we want to hear from all of you. what do you think? what is your experience? dividing the phone lines and little bit differently this morning -- we will get to your phone calls in a minute but we will start talking about those debt talks that are happening this week. susan ferrechio is from the washington examiner -- and here

are hurt at -- headlines. joining us on the phone this morning, susan, why is there anxiety? guest: hi, greta. there is anxiety because neither side is really ready to deal on this. everybody is drawing a line and not willing to cross it. republicans don't want any tax increases and democrats are saying there is no way we can come up with a deal unless there is some way to raise revenue and you can't really raise revenue unless you find money to take from taxpayers. they really are not coming together on that at all and republicans have not given away one bid on this. and unless there is some kind of compromise, there is not really a way for a deal on the debt ceiling to get through the house of representatives where there is a really big republican advantage. the senate, probably, but the house where there is a big sticking point. they have to come up with something that would clear the house in order to get through

congress and become law. that is where they are stuck right now. they will meet thursday at the white house -- republican and democratic leaders together -- and going to try again to talk, but already it sounds like this will be a difficult conversation. yesterday, the speaker of the house john boehner, republican, put out this sort of warning that we could come to the white house and talk -- that is fine -- but it doesn't sound like things will go very far, he said, unless the president understands that republicans are not willing to raise taxes. as i said earlier, the president over the said we need a compromise, we need something that involves both cuts, which is what the republicans want, and ways to raise revenue. >> have democrats compromised on the hold medicare cuts issue? guest: right now there -- what to do with medicare and medicaid. i know the republicans said they want to raise the age of

eligibility, which, of course, would save hundreds of billions of dollars. democrats said that is a nonstarter but they have talked about ways to save money in medicare. that involves a lessening the amount of federal subsidies, hospitals for dr. training and subsidies for payments for medicare patients, including people who have not been able to pay their bills. all kinds of ways they are trying to curb federal spending on medicare and medicaid, including lowering the amount of money the government would give states to help folks on medicaid. it seems on the talking stages and would not say nearly as much money on those -- entitlement programs that the republicans talking about -- raising the age of eligibility and changing it to a program that is more like giving folks reimbursements rather than a government run medicare program. they are having different conversations about ways to save money on entitlements.

but they are just in the early stages. >> have republicans are ready, and said that is not good enough? guest: no, they have not. to be said we need to talk about entitlements. that is an area where they might find compromise because republicans realize politically it is not realistic to talk about raising the age of eligibility at this point. it is not politically feasible. people really aren't ready for that. i think actually they might go for that kind of deal. i think democrats might be the ones who are more likely to be opposed to that, because it could reduce benefits for people -- although far less than what the republicans at talking about. host: will be talking about those two sides -- medicare cuts, so security, versus tax increases. -- medicare, cut, social security, versus tax increases. we will speak to a representative from the

committee -- committee to preserve social security and medicare, and after that we would talk to someone from the tax union group about tax increases, and then later, what of the government defaults on august 2. -- what if the government defaults august 2. susan ferrechio, what is the senate doing this week related to the debt discussions question like your piece talks about shared sacrifice. guest: that is a measure written by vermont senator bernie sanders, that would call for the senate to vote, i think thursday, a sense of the senate meaning it is not a binding measure, not something that will become law. wheat in of the senate believe that people who they consider wealthy -- we in the senate believe that people we consider what they should pay more to solve the debt issue -- in other words, pay more taxes. it does not specify how much

more. but kind of a sense of the senate. you may wonder, what is the point of that? it does not say how much and it does not have the force of law. but it puts pressure on republicans on the issue of raising taxes, because that is the big sticking point. senate cancel their recess, and they did it for the purpose of dealing with the debt issue but there is no specific legislation of course. i think this is one way they are saying, look, we are trying to deal with the debt issue by trying to keep the conversation going about how to come out with the money to deal with it. it will put republicans on the spot but it will also put some of the vulnerable moderate democrats on the spot who are up for election in 2012 on the moderate side, who have pledged they don't want to raise taxes. now that are going to have to vote on this. it pits them against -- you

know, do they wanted to protect the wealthy or protect tax breaks for the wealthy or try to help people who are lower and middle class. that is going to pick those two sides next to each other and that is what the vote will be about thursday. host: we hear the august 2 deadline for the nation to default. but july 22 is the date people are throwing around to reach a deal. why? guest: it has to do with when the treasury needs to know whether it can pay its bills beyond august 2. in other words, they can't just stop a flat on august 2. they have to make some of the decisions for that by july 22. there are people on capitol hill who claim that the august 2 date is not set in stone, that they've got a couple of weeks here and there to play with them. but of course trustee secretary to geithner and others say that august seconded by is -- treasury secretary timothy

geithner and others say be august 2 date is firm. the government would have to, according to some people, all laid the able to pay about 50% of what they need to pay for so they have to decide the we want to pay for so-so security, cover the interest on debt. a lot of government services would have to be stopped right away on august 3. on the 22nd that they will have to start issue the final payments because they need to know by then basically whether or not there are going to have money in a couple of weeks beyond that to keep paying their bills. host: susan ferrechio from "the washington examiner," chief congressional correspondent. many of the newspapers have pieces at about the debt talks and president obama's news conference yesterday. we want to show you what the president had to say in his own words and notes of what the newspapers say he did not say yesterday. >> this will require both

parties to get out of our comfort zones, and both parties to agree on a real compromise. i am ready to do that. i believe there are enough people in each party that are willing to do that. what i know is that we need to come together over the next two weeks to reach a deal that reduces the deficit and uphold the full faith and credit of the united states government. and the credits of the american people. that is why even as we continue discussions today and tomorrow, i have asked leaders of both parties and both houses of congress to come here to the white house on thursday so that we can build on the work that has already been done and drive toward a final agreement. it is my hope everybody will leave their ultimatums on the door, that we will all leave the political rhetoric at the door, and we will do what is best for our economy and what is best for our people. a and i want to emphasize -- and i said it in my press conference

-- this should not come down to the last second. it is important for us to show the american people and our leaders it is important to find common ground to solve our problems in a responsible way. we know it will require tough decisions. it is better for us to take tough decisions sooner rather than later. host: here is what "the new york times" says about president obama -- that he eased his tone. speaker boehner responded in a to eat -- -- in a tweet -- we want to spend the first part of this morning's program talking to you about the job

market ahead of friday's unemployment report. what is your experience? given up -- charles, illinois. caller: good morning, c-span. i have given up, i have to say. i was employed until last week, 20 hours a week, through northern illinois area agency on aging which provides for seniors. i am 62. as of july 1 we were cut back to 13 hours. this is a minimum wage job. this is for people who have given up. we are all over 60. we are all college educated. and the idea is we are supposed to find employment. well, i am here to tell you, the job creators are not creating employment for us. host: what kind of jobs are you

applying for, and what is it like? caller: i am a high-school teacher, i am a social worker with plenty of experience. those are both public sector jobs, under attack in ellen on -- illinois. there is just nothing there. can i tell you about the one victory we had at our agency? a guy named ray, a cost accountant, who got a job three months ago. we all through our hands in the air and were so happy, a job created had created a job for ray. he worked there for 32 days. as soon as their cost accounting needs were completed, then the job creator became what i call a job destroyer. fired ray, he is no longer applicable for the government's

supply jumpy had before -- he will lose his house and he does not have a car anymore -- or he will lose his carson. this is the problem with the job creators who are not really job creators. i don't know what to say. host: let us go to tell me who has a job in maryland. caller: i am lucky that i have a job. everybody is not luckie. this is a great country, you know? over and over again uc how the politicians are destroying this country. saudi arabia, for example, just raised their minimum wage $6,000 a year -- we have to understand something. we need to be patient. the recent we are here today it was not created overnight.

what i m trying to say now is for us to arrive at where we want, it is going to take time. looking at the unemployment report, we were having some progress, but it is very slow. we have to allow time to heal. host: let me stop you there, because according to this piece it, one economist says at this rate the country will not be putting enough people to work until 2023. do you think people are patient enough to wait that long? caller: no, that is not what i am trying to say. what i am saying is we need to be patient. as an area -- if you are building a house, it takes time to build a day -- build a house. but you can pull it down and one day. it is going to take time -- months, or even a year to build the house.

we have a serious problem at hand and it will take both parties to come together to fix the problem. the republicans need to stop there demagoguing and political maneuvers because all they are doing is how to win elections. host: let's talk to danny who is looking for a job in flint, michigan. what happened? are you there? port st. lucie, florida. scott, what happened? caller: i would say about two or three years ago my company ousted me. they took some cuts and the people who have been than the long as it had to lose their jobs. next thing i know they let my workers go -- i was the supervisor -- and they brought in a van from the labor force and started people with a brand new jobs with the lowest minimum wage. the job agencies, what they do is they help you with your

interview skills and right resumes, when in reality there are no jobs out there. they are helping you to get skills for jobs that and don't exist. what people don't understand is 200,000 people lose their jobs every day -- i am sorry, every month. when they finish their unemployment they get wiped off of their unemployment list and they are counted as not looking any more. this has been going on for two years -- every month of these people get wiped out and they are not accounted for. these people still need jobs and they are not doing anything about it. the greenhouse of jobs -- solar panels, reconstruction of the road, once the panels are put up, when to these roads are filled, they are out of the job. i think congress needs to pay attention -- no cuts to social security, no cuts to medicare no matter what. we need to pull and give from

that type -- take from the top and give to the bottom and let's give these companies a tax break so they can expand and hire more people in the private sector, and the government as not understanding that. host: bii tweets in this -- before we get back to the phone call we want to show you a few more headlines about the debt talkst debthe hill" newspaper reports democrats are looking for a 50-50 split of taxes and cuts. it says -- also this morning, president obama plans to hold his first twitter town hall. the white house is billing this

event today as a real-time conversation with president obama via twitter. but what will the discussion look like? participants are limited to 140 characters. questions are filtered and the president is not typing. and also in other news, " washington post" from page -- many of the newspapers have this -- commitment to try as many cases as possible in civilian courts. this story about immigration, setting the extraordinary mexican migration that delivered millions of illegal immigrants to the united states over the past 30 years has sputtered to a trickle. research points to a surprising cause --

also, the new head of the imf will hold its first news conference today. here is a picnic -- picture of her the first day of work. "the washington post" has heard salary. on tuesday, the imf published christine lagarde's contract, including the salary, -- orlando, florida. kenny has given up looking for a job. why? caller: good morning.

i have been looking for a job for a long time -- unemployed for about three years. i lost my job. i had a really good paying job. just applying for so many jobs at one time. i couldn't even tell when i would get a phone call -- i would have no idea who was calling me because i applied for 50 jobs in the last one or two days. i would be real confused. and then i would go out for day labor, i worked day labor for months and months. i would be there with a lot of other americans of building construction for 40 bucks a day. it was not working. host: why wasn't it working? caller: because when you are working day labor all day you can't apply for jobs. and by the time you get home you

are so tired from being out in the sun all day, and then when you are applying for jobs, they are calling you during the day but you are out doing the work. it is more complicated than it seems. i finally realized that i qualified for unemployment -- because i was using my own savings and it was depleted over this whole two-year period. i took the first payments -- paid registration and ended up going into law school. completely given up looking for a job. i am in law school now. host: how are you able to pay for that? caller: loans, and luckily my credit was good enough to get

the loans that he made. because he also have to have good credit. i am sure other people who maybe have families in the same situation with their credit -- going to professional school, they probably won't be able to get the loan. host: many of you heard president obama said last week saying congress could send him a job as bill right now. politico talks about the legislation. a bumpy path for senator's loan plan --

the san antonio, john has a job. what do you think about the job market? caller: i guess you could say the job market is there -- but all the haggling right now, they want to give some much money to road construction and what not. that is the wrong place to put money. unless they put it -- like, they are trying to balance the federal budget right now. i assure you, unless they cut government jobs and government programs that have been with us the last hundred years, they will never, ever balance the budget. in order for us to get to work in the private sector that you really need, we've got to get government off our backs with all the regulations. like many of the guys have all they said -- the problem is not

trying to get a job necessarily worth while, the problem is government is preventing the private sector from creating jobs. because they got a job. bay don't care about anybody else. -- they don't care about any well -- in one of did you need to tell government to cut the jobs they got. you can't pay janitors in the government's $60,000 while the private sector only makes 18,000. it has to change soon. host: east point, michigan. caller: i work at a salon for 22 years. the last three years i have lost about 80% of my clients. host: 80%? caller: i went from making 80,000 years down to 28 -- like when i was just out of college. what i noticed is everyone talks about giving the corporations

big tax breaks. haven't they had it tax breaks for like a decade and there are no jobs? do we want to continue to give these people tax breaks? those who probably at the top 1% probably are republicans and i think they are playing games so they can make more money. so, i don't know what is going on. i and and definitely disappointed with the democrats, my party. host: why you disappointed? caller: i do not think they are doing enough. i think we are too divided. i think people are too worried about religion, social issues, when they need to be focusing more on this issue. we could get to the social issues later. you understand? something has to go through. we have given corporations tax cuts for over a decade. obviously it didn't work, so

stop state -- saying that. host: let's talk to tom who has given up looking for a job in lancaster, pennsylvania. caller: i would like to throw in a common-sense versus insanity which is extreme senselessness. seven months ago i heard on the news that some 58,000 -- two months ago i heard that some 58,000 factories left the country and went to china or mexico or wherever else. all to feed wall street's profits. they stopped letting the factories -- maybe they could keep the tax cuts for the rich rather than throwing away the job. 58,000 factories and the last 10 years, that is absolutely insane. what are these people doing in

washington? it is ridiculous. and they are hypocrites. and they are saying, well, we've got to do this and that. but they are just letting the jobs go south. that is about all i have to say. host: if you want to join the conversation on twitter, our handle is the c-spanwj. joseph, who is looking for a job in new jersey. you are next. turn the television down, all right? caller: yes. good morning. my name is joseph. i live in a dirty. i am going to be july 63, 1920 and i have been out of work two years. i have been looking almost every day. just found out my unemployment has run out. there are no jobs in new jersey. i have been looking everywhere -- trying to get minimal way to

this end that. it is ridiculous. now i say they want to propose a cut in social security and medicare. right now the only thing i could probably do to survive as go on social security which would take some time. it is horrible in new jersey. there are no jobs, trust me. >> what did you do? amoco and sheet metal expert -- a wall there and also assembly for ibm computers. host: the company went down. caller: a few people left out of 30 -- 10 left. i was there 28 years. host: completely closed down or moved overseas? caller: out of 30 people there are like 10 left. it is horrible. host: how much did you make? caller: $18 an hour. host: part of a union? caller: no union at all. host: it was good money in -- without my wife working we would lose our house.

caller: but i still -- keep the faith and i will try. host: what kind of jobs are you applying for? caller: anything right now. kmart, you name it, sears -- anything. but i am old now and nobody wants to hire a 62-old-man. host: what is the rate you will work for? how low will you go? caller: i don't know. $9 an hour or something like that. host: massachusetts. george has given up. go ahead. caller: i have been listening to c-span for a few years and this is my first call. there is a point i would like to make. it is also about outsourcing. i had a successful career in advertising and marketing my entire life and the past two years i have not been able to find even contract work. i was working as a contractor, a

two-month job to help the manager at the time. it was a large project that included publishing 400 books. the point i am trying to make is when i went there, i felt this would be great, i will get to talk to the graphics people because i know the language -- and the printers. to my surprise, all the pages were electronically produced in india. all the illustrations were electronically created in thailand. and all the books were printed overseas. and the client that in these books were for work four american taxpayers children who go to school every day -- kindergarten through the sixth grade -- for american taxpayers's children go to school. the congress and the senate and they get up there and are so

pompous about everything. they outsource all of these american jobs. it is disgraceful what they have done to this country. host: trade agreements are on the table this week in discussion on capitol hill with the house smoke ways and means committee taking a look at three agreements for south korea, colombia, and panama. this is "the wall street journal" this morning with a piece about a program attached to the free trade agreement -- trade assistance administration program. it says --

the story continues inside "the wall street journal." elizabeth williamson reports about how much this costs.

we will go to mary who has a job in houston, texas. your thoughts. caller: first of all, where does the president think he is going to get taxes when no one is working? he keeps shutting down these

large companies that have -- providing jobs, like nasa. i also think they should have attacks of those companies will outsource to other countries, therefore denying americans jobs. at 64, i still have to work. i am blessed to have a job and thank all for it after 25 years. and i think some of the programs they can cut to save a lot of money that are totally wasted because i have seen these. early in the morning, these schools where the children get these free breakfasts. these little children under five or six years of age, they are like preschoolers, coming into school at 6:30 a.m. in the morning when they should still be sleeping. why are their parents not feeding them at home? everybody has of the ability with these free food pantries. i do not think anybody really is

going hungry much here in america. host: the supporters of the program say these kids would not be eating breakfast at home. that they need the nutrition to the form better at school. you think?do caller: i am sorry, what is the question? host: supporters of the program said the kids will not be eating and now it is summertime they don't have access to the free breakfast and lunch and more kids are now not getting nutrition. caller: why aren't there mothers and fathers beating them at home? they have food at home. host: you think that should be something. caller: here in houston they started a program where they are dealing with the overflow of that of food. what the children don't eat -- the milk -- and they are giving it to someone else because so much is left over.

host: related nista the job market, this is "the washington post" -- related news to the job market. also, "the denver post" kurri -- courtesy of the newseum. its petition to require paid time off. santa clara, looking for a job. caller: i am looking for a job to just buy groceries so i can keep my business the way for 40 years. we had to let all of our employees go. but enough about me. you know, i watched a show where

obama was laughing with two of his progressive friends about how, gee, you know, the shuttle ready jobs just didn't pan out. and they all chuckled and thought it was funny. i think it was interesting you read the article that they will put $2 trillion into infrastructure. wasn't that what the show already jobs or about two and a half years ago that obama said he would put everybody to work building roads? here in california he had green signs up that said, due to it -- this road is being billed and due to obama's stimulus plan. that road had been being built for four years. it had nothing to do what the stimulus plan. then you have the professors at the university of columbia when obama was there and she is saying why aren't the people rioting -- that is what they want, that is what the

progressive -- progressives want. bottom-up, top down -- they were the poor people to come up and the government to come down on the and that is what keynesians have got us and fox pivens, obama's professors, he thinks they are great. he only likes of a little less than sol ooinsky say the poor people are no use to us -- we have to get into the middle class and destroy it. obama taught a class at columbia university about how great sol olinsky, and his friend bill ayers saying we should take the founding fathers out and put people in education like -- host: we will leave it there. here is a viewer that tweets in -- here is "usa today" with a

front-page story in the money section. skill requirements mean some employers can't fill jobs. that is and "usa today" if you want to read more about that article this morning. also in the paper, back to "the baltimore sun."

many are accomplishing this by cutting state jobs -- ballston, scott has given up. why have you given up? caller: the work there was is being taken by illegal aliens. i was a carpenter for 20 years. i was below middle-class, even at that. they are getting all the jobs to people who do not have to pay for unemployment. how come none of us who worked in that field are counted in this laid off or not laid off number. what about all the people who

worked in real estate? none of those people factored into the unemployment number? we can't collect. host: scott, several opinions today, editorial pages are full of them, about the debt talks that we have been talking to you about on this show last two days and continued to talk about on "washington journal." here is "the washington examiner." put the budget negotiations on c-span -- and then "the wall street journal" this morning. they say republicans should call obama's bluff on tax increases. we will talk about that with the taxpayers' union group coming up at 8:30 a.m. eastern

time. "the washington post" says we are running on empty. why can't congress get rid of ethanol subsidies? "the new york times" calls on congress, democrats, and president obama to preserve health coverage for the poor. looking at a proposal to cut medicaid by $100 billion over 10 years. disagreeing and sang the best route to a savings is already embodied in the reform law, to make the health care system more efficient over all, that costs are reduced for medicaid, medicare, and private insurers. on medicaid it, "usa today" has a front-page story -- and inside the newspaper, we can show you this -- cuts in medicaid payments by states. several states looking at cutting medicaid payments. we will talk to sarah, who has a job.

>> i am a recent law school graduate. i got out two years ago and have been looking for work. right now just being a clerk in a small law firm. apparently i of one of the lucky ones. most of my friends are still looking -- and this goes out to a recent caller who said he was going to law school. if he does some research and looks into it, law school right now does not pay off. most people don't end up getting a job unless they have some sort of a connection or have a prior experience in the law firm. host: that was sarah in new york. coming up next, we will talk with max richtman, executive vice president and acting ceo of the national committee to preserve social security and medicare. we will be right back. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

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ahead for nasa. on line at the c-span video library. the surge, watch, click, a share, any time -- search, watch, click, share. >> this week, follow the amendment process and what of the debates on spending bills that fund the federal government at c-span's congressional chronicle -- a comprehensive be -- resource on congress, a video of every house and senate session, both records, schedules, committee hearings, and more information about your elected officials that c-span.org/congress. >> "washington journal" continues. host: back with max richtman who heads up the national committee to preserve social security and medicare talking about the debate in washington as part of the debt talks as to whether to include medicare cuts. i want to focus on that. that was the fault -- headlines in "the new york times" paper.

it said the administration officials are offering to cut tens of billions of dollars from medicare and medicaid. what is your response? it looks like the negotiator said the money can be taken from health care providers like health care and nursing homes without directly imposing new costs on beneficiaries or radically restructuring by the program. guest: thank you for inviting me this morning. i think it is important beneficiaries are not hit again with out-of-pocket cost. we have to see where those cuts are and how they impact beneficiaries and how the impact providers. let's not forget that cuts to providers, if they are too deep, will have a clear impact on access to health care for beneficiaries. we are very interested in where these cuts are and how large they are. we will see what our response is. host: what is the limit, in your

opinion -- how much can be cut before you say we are not going to support that? guest: i don't have a number for you. i do know many of the town meetings we are having a run the country we are hearing more and more doctors saying we no longer accept medicare patients because the reimbursement is so low. if it is cut further, i think it will have a traumatic impact. one thing i think is very important that we have been trying to communicate to the white house is, it has just been a little over a year when the health reform bill was signed into law. $500 billion was saved out of the medicare program. i think it would be better to wait and see how these savings impact beneficiaries, how they impact providers. we have only been operating under this new law for a little over a year. and a lot of the provisions, the cost saving provisions, have not

kicked in. so now, a year later, before many of the savings have been realized, we are talking again about cutting medicare? i think it is premature. host: was accompanied this story was this chart -- federal spending on medicare and medicaid. it shows the growth of the federal spending on both of the programs. the darker it is medicaid, the light rain is medicare. you see it going up and up. then you see federal spending in fiscal 2010. it made up 23% of the federal budget. people point to that and say something has to be done. guest: no question something has to be done. but that something is not squeezing and squeezing more out of medicare and medicaid. that something is dealing with health care costs across the board. because of just addressing these programs is not going to help reduce health-care costs for our

society, our greater society. host: why not? guest: because they will be shifted to someone else. if hospitals -- if a hospital -- hospitals are required to take emergency patients. after that, if the reimbursement rates are cut to the point the hospital is losing money -- and many of them are already losing money -- that a patient is going to be told you got to leave now. maybe go to a public hospital. who pays for that? we all do. the answer, i think, is to look at a cost of health care across the board. not just squeezing more and more out of these programs. let's not forget, these programs -- medicaid for our most vulnerable citizens, medicare -- you know, a lot of seniors, one third of seniors and rely on social security. that is their entire income.

a 4 2/3, it is half. there is not a lot of room to come up with additional resources to pay more out-of- pocket costs for health care. host: would your group support any cuts to medicare? caller: we supported the affordable care act. it saved $500 billion over a period of time for medicare. we supported that. so obviously we are willing to look at the process and support what we feel is in the best interests, not just our members but seniors around the country but families. families have a stake in these programs -- social security and medicare. we are on record supporting it. what i am trying to get across this morning and have been for a few weeks or months now is, let's see what the affordable care act could save $500 billion -- a pretty big number -- what the results are. as i mentioned in the beginning of the program, many of the

cost-saving provisions have not even begun having kicked in yet. so, to me, it is premature to go back at medicare and tried to squeeze more and more money. like i said, we are very interested in the numbers, the process for reducing payments reimbursement to providers, and we will see whether we support the deal. bipartisanresident's deficit commission looked at the health care law and said we need to do more and offered more suggestions for reforming medicare to save money down the road. does your group like what erskine bowles put forward? do, most of the things we put forward we oppose, frankly -- guest: most of the things we put -- they put forward we oppose, both social security and medicare. there are certain things and medicare more acceptable to the

american public and certainly our organization. in the prescription drug law that was passed in 2003, the federal government, medicare is specifically prohibited from negotiating with the drug company -- drug companies for the best price for medicare. unlike the va -- why not do that? it is only logical that an entity representing 40 million people would negotiate. the deal was no negotiations. and i think there are a lot of savings that could be made. there are savings that i think are reasonable -- and proving electronic record-keeping. that would not only save money but it could save the lives. host: to many of those go far enough? guest: we need to see what the affordable care act provides in terms of savings. i think negotiating prescription

drugs goes very far. i heard numbers of hundreds of billion dollars over 10 or 12 years. there are low income seniors who do not qualify for medicaid, but they are low income to the point where medicaid reimburses or pays for some of the out of pocket medicare costs. why not let at least that group of people start out -- they are called dual eligible -- why not start out letting prescription drugs for that group and renegotiated and save money there. save money for the medicaid program. i think there are steps that can be taken and should be taken before we squeeze every penny we can out of beneficiaries in providers. i think it is important to make sure these providers will provide health care.

and they won't give their reimbursements are cut time and time again. host: phone calls lining up. lee is a republican from pennsylvania. caller: whoever votes for this, why can't their names be posted? why can't there benefits be cut? they want to cut everybody else. host: voting for what? caller: it doesn't matter -- medicaid or social security. they are nothing but a bunch of thieves. host: by the way, we have special lines is set aside for senior citizens -- 737-2579. ted is calling on that line from indiana. caller: good morning. i get a report from the medicare booklet every year. the first page -- acupuncture. i am a retired doctor and i learned acupuncture from china.

i see quite a few patients a day. the reason why they come to see me -- they have no insurance coverage. for example, a man has a lower backache. for years, injection's done and surgery done, still backache. what is the man supposed to do? because acupuncture would not be paid by medicare. if it was paid by medicare there would be one-tenth of expenses. i never heard anybody talk about these programs -- they never talk about acupuncture. why? host: max richtman. guest: well, first of all, i have to say i am a little biased about acupuncture. my wife is a holistic veterinarian with a clinic in bethesda and do a lot of acupuncture. and i see real miracles on

animals treated by acupuncture. that is a slight aside and a plug. there are many improvements that need to be made in medicare, we feel. eyeglasses are not covered. i care -- eyecare. hearing aids. dentil is not covered. these are so important to seniors and their quality of life. we have been talking to other groups and trying to build coalitions to improve medicare by adding benefits. it is a tough thing to do in these economic times. let me just go back to the affordable care act. because there were additions and benefits that are new, that i think seniors are not aware of, and they need to be aware of them. for the first time since medicare was created, preventive care, screening, testing, no

out-of-pocket cost paid for by the medicare program. this obviously has, i think, and long term savings if medical problems can be detected and early. all ofn ryan's budget -- that is gone because the affordable care act has been repealed. there have been, i think, very important improvements in medicare to -- the doughnut hole will be reduced or eliminated over a number of years in the affordable care act. so, i think the affordable care act began to make improvements while saving money for medicare. so we know what can be done. .

a third of social security benefits go to non-retired workers. children, spouses. our message in these ads is these are programs that benefit families. yes, they are important for retirees, but everyone has a stake in these programs, and we need to get a priorities straight. host: what are you calling upon those that are watching the commercials to do? guest: not cut medicare or social security. -- do not cut medicare or social security. these are too important to be cut. it is convincing the majority in the congress and the white house that a priority should be placed on protecting families, protecting their health care, retirement security. that is our mission right now. host: under lieberman and

senator colbern revealed their plan yesterday. -- senator lieberman and senator kohl board repealed their plan yesterday. would you support that? guest: no, i would not. once again, let's cut medicare. it is a cut in benefits. the out of pocket even now with medicare and so securitcial sec, out of pocket costs cuts up so much of the social security check. it will be 67 under current law. how are you going to make ends meet?

how are you going to pay for your health care? as i mentioned at the beginning of the program, let's try to control health-care costs overall in managed medicare savings in that environment. that is why we need to wait and deep-rootebe prudent. host: derrick joining us on the democratic line in atlanta, georgia. caller: please do not cut me off. social security is not adding one penny to the deficit. i am a baby boomer. it used to be 16 to one paying in. that is why you had a surplus borrow from social security. also, if you look at it, medicare part b is what is

adding to the debt. you cannot negotiate a price. what you must look at also is taking the cap all of social security so rich people do not have to pay on their income. all of this is a myth. the facts are like i said. you'll never have the exact same amount of people paying in as drawing out. i am a baby boomer, and we was paying in 16 to 1. host: all right. here is an e-mail from a viewer who says please discuss the unfunded liabilities of 60 trillion to 70 trillion of social security, medicare, and they relate to the deficit. guest: let me respond to the calller first. i might use that in our ads.

he made two good points. number one, social security has not added a penny to the federal deficit. we have a surplus in social security of 2.6 trillion dollars. it will grow by another trillion dollars over the next 12 or 13 years. why in the world are we trying to drag social security into this step as it debates? -- into this deficit debate? social security has not contributed to this problem. it has helped the bottom line look a little better because the surplus has masked true size of the deficit. host: who is talking about so security? guest: you mentioned simpson boels. these meetings at the white house, i am not there.

we do get intelligence every once in awhile, and there is a plan that we have heard that will change the way the cola is computed. if you talk to anyone who is about to get a social security check, they know what i call it is. remember the cola wars? i think we're getting into another time of coal wars, because the plan is that we have heard under consideration is to change the way cola is computed. it is called change cpi. it is based on the consumer price index that measures inflation one year to the next. it is already flawed because it is measuring inflation as it impacts the wage earner, not a retiree who has different needs and buys different goods and services.

it is already flawed. now there is a plan under consideration that would use a different formula that is even worse. in other words if the price of these codif the price of beef g, you can substitute a hamburger. if the price of public transportation goes up, what do you tell a senior? now you can walk? the whole idea of substitution i think is seriously flawed, but there is a lot of money to be saved there. host: much? guest: billions and billions. if this new formula is used on the seniors will say how are you going to reduce my cola? do you want some of my benefit

subject from the last year turned back? there is a lot of money to be saved. host: which side is putting forth this -- guest: there are very few people in the room. host: but you are getting intelligence. who is putting it forward? guest: i do not know if the administration is. i know members of congress are very interested in social security. as i said at the outset, is also security should be completely off the table. -- social security should be completely off the table. it is an entirely separate discussion. i will say one other thing about the cola, because it resonates so dramatically with our membership and in general. we need not up formula for determining what inflation does

to a senior's purchasing power, we need a more accurate cola, which there is an experimental consumer price index elderly that has been around since the late 1980's. it looks at in determining what a cola should be, it would be larger. it looks at the goods and services that seniors rely on and place is an accurate weight of the market basket of goods and services. you ask how much money is involved, do not forget it is built into the base. that is compounded. over time it makes a difference. it makes even more of a difference to the individual senior trying to get by in life. frank host: , a republican in new york. -- host: frank, a republican in

new york. caller: i enrolled in social security -- not so security, medicare a and b, but i chose to pay a quarterly. well, in january of 2010 they raised me. in january 2011 they raised me. then i went to my congressperson's office and we had a three-way conversation with medicare, me, and the congress woman. the question was why am i paying more? it was not because he did not do it on time or have a large income, it is because they said the politicians said it up that because you are not getting as a security check and not coming

out of your social security check, but your on time and paying a quarterly, it goes up. that would be against the law and any medical plan that if they want to charge two different people different prices for the same coverage that they would not be allowed to do this. so instead of paying it out of my left pocket, i am paying it out of my right pocket. that was their answer. host: max richtman. guest: i have never heard of this situation, but it sounds like you have taken some steps. you had a three-way conversation with your congressperson and medicare officials, but i would be happy -- if you want to write this down. our number is 1-800-966-1935.

if you call, you can ask for me, max richtman. we have terrific case workers that have been able to help individuals. i do not think you are a member of the organization, but we would be glad to help you out. host: how do you propose to address this? guest: i am not going to get into the death panel debate this morning. it is true that all large expenditure of these medicare and medicare funds -- medicaid and medicare funds to involve the end of life care. i am not in a position to say that those funds should not be expended, but i do think in the

affordable care act there are provisions, not death panels, but ways to coordinate care so that savings, what ever staged someone is in in the process of life, to have savings by coordinating care and much more is done these days. that is my answer. host: see your citizen line. key largo, florida. gus on the line. caller: i had a heart attack and had a helicopter ride. in 1963 when i started working i was paying 1.65 out of my check for social security. i worked at a private club, and

i was talking with one ever remembers -- with one of our members. he says watch out for things they are going to do with social security. in 1980 you have ronald reagan increase it 6.2%. he did that to cover the short balls that were created by his tax cuts. also, he never put -- every year -- host: what is your question? caller: i do not like what republicans are doing to social security. why can't there be an

automatic inflation built in? guest: this is a hot topic as you could imagine. i do not think a lot of people realize that there is a cap on wages subject to the payroll tax. right now it has gone up a little bit over time, but it is $106,800. after that amount of income there is no more tax on social security. i come from omaha, nebraska. we have a citizen that has done pretty well, warren buffett. i hear him talk about how he thinks it is unfair that he is paying the same amount in to social security as his secretary is. he thinks that is wrong. it used to be the social security payroll tax covered

about 90% of wages. right now it has been reduced to 82% or 83% of wages. why? because high-wage earners have made so much money in the last 10 or 12 years that that number has been reduced. we have not taken a position on the wage cap, raising the wage cap, but there are a lot of ways it could be done that would protect middle-class american workers. it could stop at 106 and maybe start again at another figure. it could be a different percentage, but all of that would bring revenue into the program. host: about means testing for medicare? guest: some of medicare is already means tested. it sounds easy. people that have more resources should pay more out of their

pockets, but it iif you means tt also security or medicare, you cannot get a net savings out of millionaires bpaying the full freight of medicare premiums. you have to go pretty far down to someone who has an income of $45,000 per year in order to release it in the money and put money into the program, and i do not think the american people are ready for that. host: let me go back to social security. go ahead and respond. guest: as the second-largest senior group in the country with 3.5 million members and supporters we have our work cut out for us, because that is a myth that has been progress jointereported overtime.

it is wrong. i am not saying this. the trustees of the social security program are saying this. this year they issued the report. they do every year. the solvency date went down and hear from 2037 to 2036. they are saying without any changes, which is not our position, without any changes and loss, social security will be able to pay everyone all of their benefits until the year 2036. after that point there will be a reduction in benefits from 20%. that is the gap that needs to be addressed. it needs to be addressed in a thoughtful way, as has been done in the past.

the program celebrated its 70th birthday last august. there were a lot of birthdays around the country, and i ate a lot of cake, but how is a program that has been ever one that has ever been entitled to benefits for 75 years and will pay future beneficiaries every penny they are entitled to until the year 2036, how is that a ponzi scheme? i worked on capitol hill for many years. most programs in government come back to the congress before the year is over because they run out of money. social security has never run out of money. it is the most efficient government program i think we have. the administrative cost of running this whole program, tens of thousands of employees all over the country. if you need to go into the social security office, no matter where you lived, you can

drive to one. all of those costs, the cost of sending out the checks, 0.9% of 1%. this is a darn efficient program, just opposite of some would characterize as a ponzi scheme. host: they have invited the negotiators over this debt talk package to the white house on thursday. part of that debate is whether or not to include medicare cuts. possibly a reform to social security programs as well. tax increases is also part of the conversation. we will turn to that in our next -- we will turn to that in the next hour with our next guest. first, just on the line for independents. caller: i am 32-years-old.

i work construction. the point is that i am not at death's door as the previous calller said. i am still liable, but i have messed up knees and mess that baced up back, so i am enrollinn full glasses to try to do something else that does not require me to climb high-rises and do ironwork like i used to. host: what is your question or comment? caller: my comment is there are people of there that need these programs and i do not know what we're going to do about it. guest: we have not really talk about medicaid. we have a deep and abiding

concern about the medicaid program. 62% of medicaid funds go to nursing homes for seniors and the disabled. seniors need to be aware that if they have medicaid, they are born to affect seniors. at some point. the average cost of the nursing home care is $65,000 or $70,000 per year. a lot of middle-class seniors will not be able to continue with that kind of expenditure for a long, and they will lead the medicaid program. we are very mindful of changes to the medicaid program and have lived would impact seniors and the disabled. host: "the new york times"

reporting that yesterday the white house offered up a plan to help with medicare and medicaid. according to the article, a coalition of possible lobby is worried about the direction of the budget talks and has begun a national advertising campaign to block further cuts that account for 55 percent of hospital revenues. the hospitals have made a commitment to spend up to 1 million per week through august. are you part of this coalition? guest: we are not part of that coalition. we are devoting a lot of resources, and we're running advertisements on wpot this week. we have run ads in targeted congressional districts on health care and medicare changes, cuts.

host: can you give us some of the district two are running them in? guest: two districts in florida. we have run them in democratic districts as well. congressman schumer's office in i believe north carolina. democrats and republicans. i know people pay a lot of attention to this, especially with the election in new york, and we were involved in that. i went up and endorsed kathy rockel, the winner. we contributed. we have a political action committee. we contributed to her campaign. we did radio ads. why? because medicare was such an important issue in that congressional race. not because we are an arm of the democratic party. in fact, in that district in the past we supported a republican from the very district.

two of them in the past. iour involvement in politics, ad we are grass-roots education, but also very political. we follow were members of congress stand on the issues that are so critical to seniors. host: one last vote call for you. joseph michigan. -- joseph in michigan. caller: i would like to make a comment on a bill that happened for medicare prescription expenses. this has no cap for the providers of the prescription drugs. it was a boat that was forced down -- a vote that was forced down. as i recall, it was forced down

the throats of the other party. host: let me ask our guests to respond to what you have to say about that. guest: that vote took place at 6:00 in the morning. i stayed up until 3:00. it passed by one or two votes. i mention this at the beginning of the program, one of the most serious flaws in that bill, besides the fact that it was not paid for, which is pretty darn serious, is the pharmaceutical industry was able to insert in the language in that law that prohibits medicare from negotiating for the best price. i think that is unconscionable. a bill that is going to provide prescription drug coverage, some, for nearly 30 million people and not allowed to

negotiate the best price? the va does it. this was a special interest provision that needs to be changed, needs to be changed as soon as possible, and it will save an enormous amount of money. if we want to save money under medicare, that is the first step i think. host: 12 get your thoughts on this headline -- want to get your thoughts on this headline -- do you endorse him? guest: i do not know him. we were not asked to weigh in on that, but from everything i have heard from everyone i have heard it from, he has tremendous credentials and has done a wonderful job of the medicare program. i am sad to see what has happened with someone for that

background. he should have been confirmed and not subject to this kind of discussion because of recess appointments. host: a year ago this week he was put into the job during a recess appointment. unless the congress acts, he cannot stay past december. coming next, our talks turn to the other part of this discussion. pete sepp will be joining us. first, a news update from c-span radio. >> news from the united kingdom this morning. during question time in the house of commons, david cameron announced that the u.k. will withdraw 500 troops from afghanistan by the end of 2012, which will reduce the size of the british forces to 9000. britain has the second-largest contingent emerson no rigid military personnel in the country behind the united states.

his announcement follows president obama's decision to reduce american troops but 33,000 by the end of next summer. meanwhile, in afghanistan a charter plane chartered by the u.s. military has crashed into a mountain top. no americans were aboard the plane according to a spokesperson for the u.s. transportation command. we will hear more in afghanistan from general david read this. you can hear this later on c- span radio. nbc reports that mitt romney raise over $18 million in the second quarter, the amount larger than any other gop candidates. those are some of the latest headlines on c-span radio. >> c-span has launched a new easy to navigate web site for politics in the 2012 presidential campaign.

links to c-span media partners in the early primary caucus states. visit us at c-span.org/campaign 2012. >> the supreme court is now available as a standard and enhanced ebook. 11 original c-span interviews with current and retired justices. this new edition includes an interview with the new supreme court justice, elena kagan come in with the enhanced ebook at your experience by watching multimedia clips of all of the supreme court justices. available wherever ebooks are sold. it is all available to you online on television, radio, on line, and social media networking sites. find are content any time through c-span video library, and we take c-span on the road

with digital bus and local content vehicles. bring resources to your community, washington your way, the c-span networks. created by cable, provided as a public service. "washington journal" continues. host: pete sepp with the national taxpayers union. in a debt limit break out, and they are saying republicans should answer mr. obama's tax call by accepting his business tax increases for corporate jet orders, etc., in return for a lower corporate tax rate. what it reaction? -- what is your reaction? guest: this has always been part of the tax talks. prior to this time, many of these proposals were straight revenue raisers. there was very little talk of cutting rates in conjunction with getting rid of the credits.

maybe this is a breakthrough. maybe this will be the bridge that it's built to take us to some destination of reform tax system that is also raising more revenues because it is more economically friendly. host: so your group endorses this idea? guest: sure. the basic premise for broadening the base while cutting the rates. that is the basis for any good income plan. and now the commission's plan severed from of slot and that it was intended to raise revenues outside of the economic growth potential, so we thought there was a flaw there. the rates needed to be adjusted even further downward. the big problem is trying to arrange for the deal so that the rate cuts actually happen and do

not get left with more discriminatory punitive tax policy. it is very interesting. almost immediately after the president's' tax proposals came out last week, and that is before we started hearing more talk about reducing rates, i received news releases from several private jet company sang look of the contributions we make to the economy. i received another release from a philanthropic association worried about the effect that charitable giving would take it the proposal to limit the deduction were to be put into effect. there is always some interest behind a given tax deduction or credit, and sometimes it is not necessarily the worst interest. you can make a case for a lot of the provisions in isolation. the problem is we have been doing that for too long, and we're not thinking about the big picture, which is that everyone

would benefit from something that is simpler and lower rates in something more permanent. host: if you close the loopholes, you would not see that as a tax increase? guest: no, it is properly designed. what we do not want to see is something like the commission was proposing where the rate deductions are insufficient and you wind up increasing revenue to the point where you exert a drag on the economy. to illustrate a very interesting part of the commission's proposal, they are saying let's have tax reform, reduce rates, reduce a lot of those loopholes, but the effect is to keep the total revenue take of the federal government as a share of our economy at 21%. host: so it is net neutral? guest: no. net neutral would be close to 18%.

between 18 and 19. they were aiming for 21%. plus, the 21% would be reached a full decade before spending would come down to 21%. so it is a tax first, cut later proposition. host: let's read more from "the washington journal." whatever their individual merits, each of these would be a tax increase on businesses, and republicans campaigned last year on not raising taxes. guest: yes, and taken in

isolation that is part of the case. part of the deal has to be we raise rates across the board, and it is not necessarily an impossible proposition. granted president obama did yesterday a very good thing in saying that we have an opportunity to have a sweeping deal that will reform the nation's finances and should not blow it. the thing is getting tax reform done in this context where they are saying august 2 deadline is the point in which the treasury runs out of option is debatable, but it is out there. doing a tax reform deal through both committees in congress, giving it to the floor. separate versions will be voted on. that is going to take more time than we have right now. part of the debt limit ceiling deal might be that we need to set up a true binding legislative process to get tax

reform done by the end of the deal. not another timetable, but legislation saying we need the finance committee and the ways and means committee have to set out something for a vote within two months. if revenues are on the table at all, tax reform has to be the way to do it. host: some sort of binding language you are talking about. guest: yes, otherwise what we might get is a whole lot of rhetoric about beating up on a larger or a company's. the reform will never happen. that is not what we want to see. host: remind our viewers what harry reid had to say on the floor yesterday. he put a different provision related to the debt talks on the floor for a boat possibly thursday. >> the time it is here for my

republican colleagues to put call -- politics aside. democrats cannot negotiate with themselves. on the one side comes to the table and the other refuses, it is impossible to negotiate. democrats will be clear about what is at stake. the fate of our country and the global economy. we will be clear about our priority to avoid a catastrophic the fault and a bohelp our frage economic recovery. democrats were willing to compromise but compromise does not mean allowing our republican colleagues to put the wants of a few millionaires and billionaires ahead of this nation and world. host: the senate is expected to vote on the shared sacrifice resolution. your reaction to what the majority leader had to say. guest: unfortunately there are

still some die-hards within the leadership of both parties that are not quite understand the the fiscal situation we are in. start raising taxes on this industry or that industry and you score a few political points with some constituencies, but you make the tax code more complex. that is the last thing we need. our study of the tax code this year found that the value of the time alone spent complying with the federal income tax code is $27 billion. we have to do something to reverse that, not make it worse. the other problem i think though is that republicans do have to come around to certain solutions with entitlement reform. that means, for example, means testing for many kinds of benefits. i think senator colbern, senator lieberman deserve a lot of

credit for the plan they have put forth on medicare rescue. they have proposed between 600,000,000,700 billion in savings over the next 10 years. not only by raising the retirement eligibility rate, but also means testing not only that out of pocket payments, but the premiums themselves. that is something that i think republicans have been somewhat resistant to, or at least they have not given it enough detention -- attention. host: this is a tweet from boring file clerk who says -- guest: number one, if you look at the causes of the run-up in the debt, and this is from the pew commission, a nonpartisan

source, they say 41% of the run- up in the debt under bush and obama has been primarily due to increase spending, military as well as domestic. 27% is roughly due to the 2001 and 2003 tax cut loss. another 27 various economic factors such as the recession. those two 27's are linked. the problem is raise tax rates too much during an uncertain economic times like this and you will only worsen the effect of the recession, which in turn puts a drag on the revenues. again, what we need to be thinking about is not only spending reductions ever were in the budget, but also tax reform that helps to deliver more revenue in an economically but nine way. host: warrington, pa.. seth on the republican line.

caller: first of all, i basically agree with the gentleman there. i think the democratic attack on the means of production in the united states is close to treason, but i do have a question -- with all of the talking heads, and i appreciate c-span, can you tell me if that happens, it will that put the steel mills back in business? we started to go downhill when this deal business went down hill. the other thing is i want to caution people to be careful what they ask for. he just mentioned medicare again, and i was on hold for the last thing. i am a veteran. i get my prescriptions from the va. yes, the va is able to negotiate prices, but let me tell you, every other month they change the generic that i get.

what people do not understand is generics all have different ingredients. host: me ask our guests to take the first part of what you're talking about there. guest: a competitive tax system is a problem when you're looking at rates in complexity. another interesting study by price waterhouse coopers ranked the burden of complying with the corporate tax system for a hypothetical medium-sized business. we rank fairly around 60 of 183 countries in terms of ease of compliance with the code. we need to start focusing on that, as well as the tax rates, if we want to get local manufacturing back in business. we need to stop chasing those jobs and manufacturing industries out of our borders. that is what we're doing when we have such high rates, such high

complexity. there is hope for bipartisan agreement appearing more and more talk among democrats and republicans in support of repatriation earnings. in other words, a lot of companies that have parked earnings overseas for fear of having to pay huge tax rates in the u.s., letting them bring the money back at a lower tax rate. it was tried earlier in the decade, and in fact it did yield a lot of revenue for the federal government. it certainly is a poor substitute for permanent tax reform solution, but it could help. host: ken weeks wants to know what can be done to make sure all corporations have to pay taxes like regular citizens. for example, ge pays no taxes. guest: that was an interesting controversy, because it has since been revealed that g actually preferred liabilities

-- ge deferred liabilities that they were going to pay in the future. companies with similar profits paid wildly different taxes in terms of the burden and the types and their rates. that is the kind of consistency we need to start working on. we tend to focus on the longitudinal fairness in the tax code, looking up and down the income scale. we should be looking sideways to make sure that people and firms that make relatively the same amount of money pay relatively the same amount of taxes. host: weary in new jersey, you are next. -- larry in new jersey. caller: when you refer to broadening the base. guest: their earned income credit could be part of any kind of tax reform solution.

it is important to remember that the earned income credit does have a direct effect on federal spending, because part of it is refundable. in other words, people can obtain an additional amount of credit and access -- in excess of the tax liability. president obama's latest proposal had upwards of $150 billion worth of refundable tax credits that would have a direct impact on the deficit. that might need to be explored, but there are many tax reform plans that would have some kind of liberation of the e.i.c. or in the case of national retail sales tax, a very large exemption that would have almost the effect of an e.i.c., and at least so far that it would zero out the tax liability. host: next calller from

virginia. caller: i would like to get away from the discussion of the numbers and philosophy and talk about the characters that are driving. in virginia we have eric cantor, and i do not know who he represents, because he is not interested in any of the people. he has given time over and over a bully pulpit on television to bring out his mug hyperbole. as a republican i am embarrassed by these characters. these demagogues that seem to be driving the conversation. we do not have time to get down to the philosophical point of view. what we are mired in is the media's need to make a start out of someone like eric cantor who does not care about the nation. host: let's go back to the

policy. you would like to see republicans put forth what when it comes to the tax revenue? caller: i would like to see republicans acknowledge that their neighbors are hurting. i would like to see that come off the high horse and worry about where the real people live. stop worrying about the fact that rich corporations do not need to be taxed. we have people like eric cantor, and that is to their running interference for. host: david brooks had a column on monday in "the new york times." he said this -- reareferring to the tax subsidis for corporate jet owners and other tax loopholes being

closed. do you agree? caller: yes. guest: i think brooks is oversimplifying there, only because we have had this promise on the table before. we had in 1982 and 1983 and 1990 under a republican president. we have it with the commission's plan. if we're going to work out something involving revenues, we have to see spending cuts taking effect, and has to be in the context of reforming the system, otherwise we will get higher taxes and never get the spending reductions. republicans again have not handled this issue all that well, especially with long-term reforms like the balanced budget amendment, which the leader some -- leadership seemed prepared to through in the tatrash can on the vote.

i think it also symbolizes the balance we want to restore to fiscal policy, because the gop had lost its way during the bush era, especially on spending, and continues to stumble on the issues that people care about a lot, which is establishing a long-term stability and keeping excessive borrowing like this from happening again. host: any deal to raise the debt ceiling has to include a balanced budget amendment? guest: that is the coalition's goal. the votes on the balanced amendment will happen later this month. in the house and senate. the senate as of now is scheduled to vote first. maybe that will change. it is hard to say. the problem is you need a two- thirds margin to pass the

amendments. we have not seen enough effort on the part of the gop leadership to reach across aisle on this issue. there can be support for such an amendment. tom harkin voted for it. stanley collier has voted for versions of this in the past. -- steny hoyer has voted for versions of this in the past. host: here is an e-mail -- guest: i do not think that a clean debt ceiling bovote, which has already occurred of course, is a good thing for the country. that would send a signal to markets around the world that we're not serious about addressing the underlying causes of future indebtedness. the big problem we have now is getting an agreement, not only cutting in the long-term, but

capping spending in the medium term and reforming the budget process itself over the long- term. those are the elements of cut, cap, and balance. there has been a lot of back and forth on what happens on august 2. do we deep fault of the national debt? not really. -- do we default on the national debt? the problem is that we are dealing with future expectations of spending and debt, so we need to be addressing that at the same time, otherwise we will have a market reaction that will be a no-confidence vote in the government's ability to borrow. host: coming up in 25 minutes will week -- we will be talking about what happens on august 3 if there is a debt default on august 2. we will be talking with the

bipartisan policy center who recently did an analysis of what bills we have, which bills we could pay, and which ones will go unpaid. we will go to clearance and pennsylvania. -- clarence and pennsylvania. caller: the debt is too high. they should capet right now and start taking it down. the way they can do that is they have 22 million people in this country that are not documented, they are not paying no tax. allowing them to work for $6 per hour. host: that is clarence's opinion in pennsylvania. the next calller from michigan. caller: not the last calller from the public but the one before who was republican was one of the most coherent, well-

spoken republicans i have heard in ages, and i do agree with david brooks' column. the problem we have had, and you recognize that bush was a problem. his problem was he kept cutting taxes on those who could most afford to pay taxes. host: let'[s take that point. -- let's take that point. guest: taxes were reduced across the board. something around 40 million people were off the tax rolls in the eight years the bush served. do we need to revisit tax policy? we certainly do. again, i think we have the makings of a deal here if congress and the president will take a comprehensive approach, not only to who is paid what at various income levels, but who

gets to deduct what, who gets to take what credit. all of those questions need to be answered. we never did that under the bush administration. host: if they have to have some sort of deal in place by july 22, how is it realistic they could come together on changing the tax code? guest: clearly there cannot be a deal reforming the entire tax system by august, but there can be a deal to commit to votes and the legislative process. not just another commission. i have seen 10 of those in the 23 years i have been in washington on tax reform. we do not have time for that. what we do have time for is a structured package that will guarantee boats and have some kind of tax reform deal cemented probably by the end of the year. host: jim, a republican baltimore.

good morning. caller: my question is the constitutionality of whether or not singling out your enemies, which they never even identify who these people are, verses clean energy, wind, solar, who get the same tax subsidies and breaks. these laws are written in the tax code and will have to change the whole tax code. they cannot pick and choose who they will punish. is that correct? guest: yes. the constitutionality of that has been raised and prior years. can attack system be so discriminatory, not only against people but for people? unfortunately we're way beyond that question, and it will take a tax of policy to pull this back, and perhaps constitutional amendments down the road to cement into place the gains that

might be made with rate reductions in base broadening. there are in fact and a balanced budget amendment proposals, several of them would require that two-thirds super majority of both houses of congress in order to increase taxes. that of course would help if we lowered rates across the board and wanted to prevent congress from starting to chip away at any reform that was made. that is of course what happened in 1986. the agreed to a deal. four years later republicans and democrats were creating a new tax bracket. three years after that there were more tax brackets created. under bush all kinds of additional card out. host: this is an opinion piece in the "the washington post."

in that sense, this is not just a constitutional option, it is a constitutional obligation. one even the tea party will have trouble denying. she goes on to say -- guest: very interesting argument. of course the 14 mmx clause talks about how the united states must authorize

obligations by law. -- of course the 14th amendment talks about how the united states must authorize obligations by law. the such a wage and would be rather die here if we get past the august deadline, whether it is the second or six or 10 or whatever, there would have to be some pretty tough decisions to be made, debt ceiling or not. if the debt ceiling were not approved, we would be looking at prioritizing payments just to interest and pension obligations. certain other programs would stop completely as the situation war on. i do not think that is in the republicans' interest. . .

host: the democratic caller id -- ivan, in cape cod, massachusetts. caller: i did not call about this, but since your guest brought up constitutional amendments, i would like to throw he and that the only constitutional amendment that we

need is one that would completely eliminate any political in donations or contributions -- make all political contributions completely legal and only have public financing. clearly, our congress is operating by whoever pays them the most money -- that is who gets the attention, and that is who they are serving, not the american people. i think the republican party at this moment is acting like terrorists. they are taking our economy and our way of life hostage, not negotiating, saying you do what we want, or we will blow up the economy. host: let me leave it there, and add to that when david brooks had to say in his column. he says tax breaks matter, but they are far from the most important factor. guest: i would not say they

are far from the most important factor, and our independence circumstances that matter, but they matter a lot in the way the government goes into further in debt, and the way various industries and individuals can start new businesses, employing people. they definitely matter because we see it all on our state and local governments. tax policies can either lower or to chase away industries. we are not talking about a tax credit for film makers. we're talking about keeping rates low and consistent. it has been documented that populations as well as economic activity has been moving south and west. one reason why is because those states have either of low or no income taxes, lower taxes on businesses, and several other factors like labor laws.

host: will go to david, a republican in johnstown, pennsylvania. welcome to the conversation. caller: my comment is the whole system has to be overhauled. you cannot give tax cuts. tax cuts are always when do favor one party or another -- the rich, the port, where the middle class. if we can see me tell it all. i have it all figured -- we can see me tell it all. i have read all figured out the red -- has figured it out. republicans want to do everything for the rich. the democrats do not really want to do everything for the port and the amount -- and the middle class, but they want to do something for the four and a middle class. sdr is gone new -- fdr is gone.

new deal economics are out the window. i am a political. i do not believe in taking money off of people simply because they make money. simply because a billionaire has money you take money off of them. here is what we can do. you can save corporate taxes and bring them to zero. i am sure everybody would like that. you can take social security, and take it out. if we can't take this tax system and run it in a way that -- we can't take this tax system and run it in a way that people share in this business, if you know what i mean. they would get a percentage. if you get a percentage, people would work harder and there would be no arguments over the debt. guest: interesting concept -- is

working. the model of reform that many people are suggesting -- is working to the model that many people are suggesting, with an investment of more people in the tax system. that is something to be monitored. that is another strain we have been seeing. fewer and fewer people are paying significant burdens of the income tax. that is not necessarily an argument to make more people pay, but it does feed into the lack of a political stake in the way we tax. several callers have talked about the political corruption associated with the tax system. milton friedman was among those saying that tax reform would be difficult to achieve because the people that have to do with our behold and to the interests that got them into office, and not just the interests, but the

members of congress themselves enjoy holding the power to reward friends, on-enemies, and do whatever they have to. that is a tough part to give -- in. host: this tweet. martin, in kansas. caller: thank you for taking my call. i am disturbed by the cuts they want to make on the american people. and these are our people. they would rather cut -- host: what cuts are you referring to? caller: social security and medicare, they cannot cut these. i am talking doctors, nurses, jobs and prioritizing them first. first of all, defense spending

is just outrageous. you cannot spend millions of dollars on things -- is getting out of line. host: ok. martin says no cuts to medicare, we should look at defense spending, but" the wall street journal" had a front-page story yesterday about what is being proposed. if i want to get your reaction. one of them is that the last in, first out, method lets companies figure up the price of goods at the most recent market price paid. being able to list higher expenses makes taxable income smaller. this would change as they were to reform that, and that could bring in $60 billion or more over 10 years. in guest: that sounds like a lot of money. unfortunately, the tax we face is gigantic, and it cannot happen without spending

restraints on that side of the ledger. if there is just no way. there is no argument from us on the need to restrain defense spending. i have seen estimates that in 1.3 trillion dollars of the national debt is due to the fact that we have at our military go into iraq and afghanistan. ups in add other ramp military spending, and foreign aid, some people put the total at well over 2.5 trillion dollars. there needs to be at a pullback. we worked with and an outside to put about six -- and out fed to tfit to cut spending in the defense area. i think we can do better than

that. republicans are starting to realize that should be on the table. it was not something they seem willing to discuss the beginning of this congress. for medicare, i think there will need to be bipartisan agreement to it least slow the growth rate of that spending. in the mid-99 d.'s, congress and the president agreed to slow the rate of certain spending, and in conjunction with the end of the cold war, and a capital gains tax reduction -- those all helped to contribute to a more stable fiscal environment that led to a very short era of balanced budgets. host: according to "the wall street journal, called the biggest item on the democrats' list is an itemized deduction for higher-income earners.

host: what do you make of that? guest: interesting. they are trying to ratchet up the tax rate in bits and pieces. if there is also an increase in federal tax rates coming due to the new federal health care law. there is also talk of raising the capital gains tax rate, doing that in conjunction with limiting the value of deductions, and, perhaps, restoring the 39.6% rate would make the tax rate quite high in the united states. that is something to pay attention to. recent studies of the industrialized countries show that the united states gets an extraordinarily high amounts of federal payroll and income tax revenue already. it would be interesting to many to learn that even the

scandinavian countries get less out of their rich folks than we do in terms of federal income and payroll taxes. i think the middle class welfare states in those countries have allowed to do with it. if they cannot support them simply by taxing wealthy people. host: a couple more phone calls for pete sepp. alex joins us. an independent in new jersey. caller: the only thing i said is that i find the republican petition perplexing. do they do not have the presidency, they do not have the senate, yet they expect a positive. i agree there has to be a significant amount of cuts down in entitlements. eventually, seniors will have to pay more for benefits.

maybe in 10 years, or immediately, the age of eligibility for medicare may have to be raised, but miami and financial services. -- i am in financial services. if the debt limit is not going to be raised, or enough to get us through the 2012 election there is pointed the financial catastrophe. host: this tweet -- host: why not agree to that? guest: i am not sure the proportion is the end that amount. host: david bruck says it is 3- to-one.

the guest: the timing is important. will we see the revenue and spending later? if you look at the character of the spending cuts, they will not take effect adequately. i worry that we are setting ourselves up for one of these grand deals where spending keeps going up, taxes go up, and we do not get the deficit reduction that we need. it has to come down to entitlement reform. tax reform, again, we can setup a process where that gets dealt with by the end of the year, but we cannot do that with entitlement reform and say there is going to be another commission. we are going to have to have honest discussions about things like raising the retirement age and means testing. if you put that in legislation upfront, even if it's phased in over 10 or 15 years, like most plans do, if you commit to it now, that will be progress.

host: let's do one last phone call. john, a republican in georgia. caller: i am going to put you on the spot. you are very intelligent. i would be surprised if you would be able to answer this question, but it is a sad commentary that the vast majority of american people do not know this. are you aware of the quarterly growth figures in 1983 and 1984 after years of no growth, extremely high unemployment and inflation? are you aware of those figures? host: what is the point? caller: we will have a 1.7% growth this year. in 1983, after the biggest tax cuts in 60 years, revenue increases and grows -- 5.1% in the first quarter, and the

second quarter was 9.3%. host: pete sepp? guest: certain tax policies can help to grow an economy. he did not just happen when ronald reagan. that happened in the 1920's. we do have the promise of revenue growth if we get tax policy right. some would argue that tax increases that were enacted along with the income tax rate reductions in the 1980's are responsible for some of the revenue growth, certainly not so much the economic growth. the point is we need to try tax reform again. we have not done it for the better part of 25 years, and the system is suffering dramatically for. host: pete sepp, thank you for talking to our viewers the bipartisan policy center came out with a new analysis that the government cannot afford to

meet 44% of obligations of the debt ceiling is not raised. first, a -- and update from c- span radio. >> the u.s. practice of extraordinary rendition following the september 11 attacks will be part of the british inquiry into claims that terrorist suspects were tortured. the source confirms that a panel of three experts will examine whether britain had a role in the alleged torture, mistreatment, and rendition of detainees held overseas. more from representative peter king on homegrown terrorists -- the chairman of the homeland security committee has joined with congressman frank wolf in calling for the bureau of prisons to remold the inflammatory written, audio, and video material is produced by the nation of islam and louis farrakhan, and also examine all other islamic materials

circulating in their facilities. an update on the fema trailers that set unused after some katrina victims fell sick due to formaldehyde in sight. the travelers are now being put to use. the government is giving the trailers to american indian tribes in rural oklahoma who need affordable housing. those are some of the latest headlines on c-span radio. >> blackberry users, you can access our programming any time with this is a better radioapp, with four streams of our programming, commercial-free. if you can also listen to our signature -- signature interview programs. download it free. >> now available, c-span's congressional directory. inside, new and returning house and senate members, with contact information, including twitter addresses, district maps, and

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continues. host: we are back with jerome powell. is there a crisis on august 3 if the debt ceiling is not raised on august 2? guest: our estimates show that on the morning of august 3, the day after the government runs short of cash, we would expect inflows of around $12 billion from tax receipts, and the government would face obligations to pay about $32 billion. the biggest piece of that, by far, is the first social security payment of the month, which falls on the third of the month, because it is a weekday. you would have the possibility there would be not enough cash to make that payment. i would not label that a crisis, but i would say it would be an extraordinary event, and the first time in our history department has failed to make

any payment as a consequence of the debt limit impasse. host: what does it mean to default on the debt? guest: i do believe, and i want to believe strongly that this whole episode will not involve a default on our debt. there are several reasons. there is always enough incoming cash flow to pay interest on the debt. no matter what we do, we will always be able to sell new debt to pay off the old debt that is maturing. there is a small chance of a debt default, but it is not likely. when is a certainty is that after august 2, what -- we will not be able to pay many of our non-debt obligations. we will cut spending by something like 44%. you cannot do that without cutting important programs. host: how many bills as the government have? guest: the government pays something like 80 million bills

per month. you cannot imagine the treasury department soared -- sorting through the 80 million monthly payments that are made, and try to select enough millions so that you have cut spending by 44% over night. this is something the federal government has no institutional role in doing. it is not up to the executive branch to cut spending. it is up to the executive branch to carry out congress, the spending orders. host: how would it get done if that is the case? guest: you have to hope that never comes to that. we should all be hoping there is some kind of agreement reached in these talks that are on going this morning 10th and, that we avoid this event, because this has never happened. we have never passed the date that is the equivalent of august 2. we have never passed this date,

and that is the date test which we will no longer be able to pay all of our bills. the federal government would simply have to choose winners and losers, and not pay 44% of the bills. we tried to find a relatively painless way to do that, and you cannot do it without cutting things like social security, medicare, medicaid, or defense spending, or the justice department, frankly, which runs the federal prison system, the courts, the fbi, the u.s. marshals service. very important euros of government would have to go on funded, and transfer payments would not be able to go fully funded to the core and the sick. host: you said there are about 80 million dells. about 30 million would not be paid? guest: it would not be the number. you would not know the number. while we know is that the federal government would not be

able to pay one under $34 billion worth of bills -- $134 billion worth of bills. some enormous number of bills would not be paid, and could not be paid for the lack of cash for the first time in our history. host: let's take a closer look of what happens august 3 according to this analysis, authored by mr. paul. -- mr. paul. -- powell. this is how much the bill would be on august 3.

host: do we have to pick and choose from that list, or is that everything that gets paid? guest: the one estimate we feel confident on as the social security payment. if you have $12 billion coming in, and a $20 billion of security payment. there is nothing to pick. he did not have the cash to make that payment. you do not have the ability to pay some recipients, and not others can read now, this is not a prediction that we are not willing to make that payment. if this is just a statement that there will not be enough cash. there are many things that could happen. that could be a deal, and we never pass this date. or, as happened back in 1996, congress passed a special debt limit exemption to allow the administration to bar just enough to pay that payment. if nothing happens, we will not be able to make that payment. host: we will get to pedro, a

republican in florida. caller: my question is what is going to happen to the rest of america is the country default? host: what do you mean, the rest of the country? caller: companies employ a lot of people. when they keep running backs host: how would corporations react? ho ourning back corporations t? host: how would corporations reacted? guest: if it goes on for any significant period of time, more than one day or two, there was certainly be any effect on the broader economy. the ability to pay $134 billion worth of bills reject that is the equivalent of about 810% reduction -- that is the

equivalent of about a 10% reduction in our output nationwide. what that means is that suppliers are not getting paid, and they will lay people off. a couple of days is not going to bring the republic to its knees, but if it goes on for the month of august, which is a hypothetical we were looking at, you can imagine significant disruptions in the broader economy, and interest rates going up. that will hurt the economy and housing market. you can imagine the significant negative impact on our already- weak economy. days out didow many you calculate? guest: we went through the end of august. it is hard to imagine this experiment. host: why? guest: because of the amount of disruption. you are looking at enormous

government payments that cannot be made two important constituencies. we looked at it in all different kinds of ways. you can protect all of the safety nets -- the poor, the sick, the elderly, the people that get payments -- you can protect all of that, but if you do, you do not have $1 left to pay for defense or the troops and you cannot break the justice department. you open the prisons and let everybody go? that is not going to happen. what will happen is something in the middle, where you protect everyone a little bit, but there would be disruption. if there is also a risky market. there is something like $500 million worth of federal debt that matures in august, and that has to be rolled over, by which i mean we need to find new buyers for new debt, and if that does not happen, we have an immediate default. the chances are the rates will be significantly higher to

attract new buyers, and that will have an effect on the economy and the global economy. we thought this turmoil -- the chances that it could run more than 30 days are quite low. host: you mentioned the numbers that we have been showing our viewers about committed spending. how were you able to figure this out? guest: we worked principally from information data that is available on the public domain, the treasury department website, and the main sources the daily treasury statement, which shows the actual cash position of the federal government five days a week. we went back several years, loaded it into spreadsheets, and found what the patterns were in terms of inflows and outflows -- taxes coming in, fees coming in, and expenditures by category. the fence spending seems -- defense payments and are made in

a pattern. social security is on a schedule. we understand that very well, as well as other elements of federal spending, and we mapped out the month of august, and we came out with -- i feel confident for our estimate for the entire month of august on inflows and outflows. as you get to particular days, i am sure we did not get everything and to build the right, but we are a complete outsider to the treasury. nobody has access to their numbers. we made our own independent estimates. host: how did past experiment -- past experience play into how you figured this out? you were an undersecretary and the treasury. how did that help you? guest: i served under president george bush sr., and part of my responsibility was the management of the federal debt and the debt limit itself. i have a fair amount of background from 20 years ago now

to understand how this works. in addition, i have watched these debt limit fights all these years, as anyone who had been in my job would do, and finally, there is a lot of public information if you want to dig around on the treasury website and the bureau of the public debt website. it helped to guide our study, but frankly, anybody who was diligent, could've done most of this out. host: were you the guy that paid the bills? guest: in my day, we did not have anything like this severe of a confrontation. if i was a policy official, presidentially appointed, and confirmed by the senate, and i had responsibility for deciding how much debt to issue. i also had responsibility for banking policy, economic policy broadly, and those sorts of things. i had a broad job, and one piece of it was the federal debt.

host: we're talking to jerome powell. he offered a peace and what happens if the debt ceiling limit is not raised. the bipartisan policy center has estimated there will be $4 billion in revenues and $10 billion in committed spending. that includes a $1.4 billion for defense, etc. you can see the list. we'll go to patricia, a democratic caller. you are next. caller: since you mentioned federal spending seller is, can we cut the salaries of the tigris and? guest: can we cut congress salaries? congress makes the laws, and they are signed by the president, so we would be up to congress. can the treasury department refused to pay congress? actually, first of all, treasury

has no legal authority nor an institutional role in deciding who to pay or not to pay, but in this particular situation, there will not be any choice. if there will not be enough money to go around. that is a good question. i am not sure if there is particular legal protection, but that is a very good question. host: kenneth, an independent in delaware. caller: good morning. i'm a first-time caller, trying to get through four years. what i would like to embrace is social security. i will be 60 soon. i'm a baby boomer. i would like to know why they took certain parts of the social security away form people as they were paying into it, and to stop the people messing with that, what senior citizens should do is file suit with a

lawyer against the government for what they paid in. on income tax, they should give interest? , and there should be no income tax. it should be eliminated. host: how are payments made for social security participants? guest: some are made by wire transfer, and some by check, and the big payment of the month is the third month -- third day of the month, and that is for people that i've been in the system for a fairly long time. on the second, third, and fourth wednesdays of the month, other payments go out. that is how they do the payment. host: on august 3, there would be $23 billion in socials carry payments due. logan, a republican in brady, texas. caller: a lady asked the

question i wanted. my wife has social secure it, and out of nowhere they stopped paying her, and did not give her a reason why. now, they have told her she is been denied and she has to file for isaf. host: i'm not sure if our guests can help you. richard, democratic caller. you are next. caller: i have listened to both sides of the i'll talk about the middle class. can your guess, or somebody there, give us a reasonable definition of what household income is for middle class, and what better range would be? i think it would shed light on the discussion. host: we're talking about this new analysis put dark about what happens if the debt ceiling is not raised. the two sides are negotiating this week. there is expected to be a

meeting at the white house thursday between the president, vice president joe biden, and congressional negotiators. michael, a republican, in arizona. help me with the name of your town. caller: [unintelligible] i would like to bring up the topic -- while all of the talks is going on about deficits and how that will be repaired, i hear very little discussion about what the government is supposed to be doing in the meantime. one, and your guest made, and this is just one example is, we will have to pay for prisons. we cannot bypass that. well, in looking at prisons right now, prisons and jails in the united states -- they have

approximately 1.5 million persons there on various drug charges. host: we will leave it there. here is a tweet -- guest: well, now. if the fed has kept short-term interest rates very, very low, in an attempt to stimulate the economy, and increase economic growth care at economic growth is absolutely critical in driving -- growth. economic growth is absolutely critical in driving higher tax receipts to work on the deficit. the higher economic growth is, the more the tax system takes in in revenue. right now, it is a record low as a percentage of gdp, about 14%, whereas historically, it has been 18%, and that is because of

low economic activity. if the fed is doing what it can to stimulate economic activity. host: here is an article about ron paul. host: it is tied to the debt ceiling equation. by destroying those bonds, that would free up 1.6 trillion dollars. guest: if you're going to destroy bonds, why not raise the debt limit ceiling? it is not going to happen. the fed does not have legal authority to do that. the congress can this -- can order the fed to destroy bonds, they can also raise the debt limit. i do not think that is

happening. let me explain see your listeners that congress orders a certain amount of spending then, the executive branch carries that out. -- spending. then, the executive branch carries that our. there is not enough money to pay for all of the spending that congress has ordered, and congress permits the executive branch to borrow the remaining 40 cents. now, at the ceiling, congress will no longer permit the borrowing. if congress says do not spend the money, let them do that. to not raise the debt ceiling is to put teeth into a branch in the and as a crucial situation where it does not know what to do. -- branch in a situation where it does not know what to do perhaps. -- to do. caller: what you said with the

executive branch. out congress -- carrying congress'orders, it deals with the scenario of things coming to a halt if we do not do this or that, just like it does better with our financial system and everything. as a democrat, -- just as it has been with our financial system and everything. as a democrat, and a progressive, i am angry. i am almost like let it go on so the end, and quit giving in to the republicans on this. if they are not going symbols and gives, where are we to go? host: laura wants to let it go on so the end. guest: this is what happens to countries that are in financial distress. hall choices are bad.

they are all difficult. you can see the extreme case of that in greece right now. lawmakers have no pleasant choices. there are very difficult. if you are right to draw parallels to what happened two years ago with the near collapse of the financial system. his quick collapse august 2, and the government is no longer paying -- is we collapse august 2, and the government is no longer paying, it will give this to get -- spectacle of the world's greatest nation and the best credit in the world not paying its bills on time for the first time ever. our role in the debate has not been to tell people what to do. it has been to try to explain to people while it is hard to raise the debt limit, there are consequences for not doing that. host: republican leader mitch mcconnell was on the floor yesterday talking about the negotiations. >> washington is engage in the debate over the kind of country

we want to be, and the specific issue is this -- at some point, over the next several weeks, the federal government will no longer be able to borrow the money it needs to cover the cost of promises it has already made, so the president wants congress to raise the statutory debt limit set by congress. he wants us to raise the limit on the national credits card. what republicans have said is the only way we will do it is the democrats' change their ways so that we do not end up with the situation we are witnessing over yet greece. make no mistake, that is exactly where we are heading if we do not do something significant, and do it now. host: is that where we are headed, jerome powell? guest: i agree with the thrust of those remarks, which is we need to do something serious now.

i am not advocating, and i do not think anybody is just advocating that we raise the debt limit, but since we have to raise the debt limit, we need to do something serious about deficits, and this is a pretty good time to start. even if we do not get the whole job done, let's make a credible first start, and tight canress' hands, so they not we go out of the deal is they've made some times in the past. it is congress that decides what to spend. i would agree with the thrust of senator mitch mcconnell's remarks, but would hope we do not have to cross this august 2 line and run extraordinary list. host: sydney more e-mails and in -- guest: i did not believe there will be a default on debt. i hope not. that would risk the kind of

financial market collapse we had in 2008. n default, i will understand? imine the idea that we did not make our payments, -- i will understand that to mean bad we do not make our payments -- that to mean that we do not make our payments. host: charles in louisiana. caller: when this is over with, and we look back in about a year, this is what caused it, and let me say it one time -- it's a we are listening. caller: nancy pelosi, harry reid, and barack obama have not passed a budget in the last two years. plain and simple. it was not fox news, and something else, and democrats.

remember, for the last two years, it was not fox news. host: got the point, charles. how important is it that congress passes a budget? guest: it is critical, and what you are seeing are signs of dysfunction that are really themselves because of horrible choices that congress faces. you have these trillion dollar deficits, and it will be painful and unpopular to do the things we kind -- we need to do. every time we cut spending, it is in the budget for a reason, and when you cut it, it is always do not cut me, cut somebody else. these are hard choices. i would say the real issue is the -- is much deeper than the issue to pass a budget. i think the real issues are centered around our entitlement spending, and really health-care

spending. we have tremendous health care costs in this country that are far greater than they should be to get the health-care results that we get. if we of the most expensive health care in the world by an enormous gap, and we do not have the best system. we need to address that. medicare, medicaid, and the other health-care programs, we will not be able to control their spending without controlling the growth of health-care costs. host: matt smith has this tweet - guest: as i mentioned earlier, the main reason for that is the weakness of the economy. you have to assume that there will be something in the deal that is done to avoid the debt limit impasse. there would be some revenues of some kind. i do not have private insight into those talks, but clearly, if there is talk of revenues.

we will not see higher tax rates at all. that is not on the table. what appears to be on the table is the elimination of tax expenditures for loopholes, depending on what you want to call them, that have the effect of raising revenue, like the ethanol subsidies, which are popular to oppose, yet they seem to persist. host: let's go to. , an independent in michigan. -- eric, an independent in michigan. caller: the united states government as bond for national welfare. that has to be paid. having a military that we have -- other things like health and education, agricultural bills, and stuff like that, that is not a priority, so those things can go by the wayside. to raise revenue, or whatever we

had bad debt limit, he is constitutionally bound to do that. he does not do that, we impeach and. guest: the president has constitutional authority in areas like foreign policy and military affairs, although there is a debate on that right now as it relates to libya, but the president's role in our constitutional system is to carry out spending orders, and not say these are more and heart and then those. it is never happened in our system. it is really up to congress to decide how much money to spend, and the executive branch to go ahead and spend it. ken -- wes is from ca cannot keep borrowing money we do not have, other countries

have survived. guest: it is like saying we're all going to die, so let's all commit suicide. it is absolutely not a good idea to default on the debt. the possible ramifications of defaulting on the federal debt are enormous, and we are working on this problem. if there is progress being made. there is every reason to think we could make good, solid progress on this, and it is not time to start defaulting on the debt, and for the world economy into chaos. host: in this analysis, you put out several scenarios for august 3 is the debt ceiling is not raised. if you want to protect the programs like social security, medicare, it cetera, you do that at the expense of others but all that. -- below that. at one point you're talking about shuffling things around. at what point do we actually

default on our debt? guest: to avoid default on the debt, u.s. to pay the interest, and the principle when it -- you have to pay the interest, and the principle when it is due. i assume, as a former federal -- treasury official, that the administration would always give the highest priority. host: what is the bill? how much does that cost? guest: it is something in the range of $30 billion in august. i think the first thing to do would be to set aside that amount of money. had it seems they you could go on for a very long time without running out of cash to be able to pay the interest. the issue that nobody is talking about is really the fact that so much debt matures. we roll over debt, and do not pay it. we do not retire debt in our system. debt comes due, and we issue new

debt, and use the proceeds of the new debt to pay off the old debt. most of it is short-term. in august, as it so happens, something like $500 million of debt and would mature, and in an ordinary course, you would not notice it because we would be selling securities to pay off the maturing debt. the issue will be that this all this could be different than every other august. which could be a global spectacle for not paying our bills, and what will the buyers do? half of our debt is bought by nine u.s. participants. when will they do? we are the only country in the world that has a statutory debt limit separate from congress actions. if they decide not to buy our debt, rates will go up, because demand will have gone down. there is always that possibility. we think it is a small possibility, but there is a

possibility not enough buyers shop, and you have a default. host: another tweet -- guest: i strongly agree with .that tweet it is irresponsible to put it in the conversation that it would be ok to default on the debt. it is irresponsible and unforgivable. the discussion has not been helpful, and it has not been a particularly important part of the discussion for the most part. almost entirely, the leaders of both parties have avoided discussion of that, and avoided speculated about how that might be ok. host: joyce is a democrat. welcome to the conversation from missouri. caller: i would like to comment

that your guest this morning is one of the most credible non- partisan speakers that i have seen on c-span. i am an avid watcher. i appreciate having him there this morning. my question to you is for those opposing the increase to the debt limit, who is advising them? what credible, economic, non- partisan advisers is this group of opposition leaders and followers listening to? or, is this strictly ideologically-driven, and completely a partisan issue, without regard to the reality of the outcome in the global and national economy? i will take my answer offline. guest: so, i actually have made

this presentation, and i speak to people on the hill, including a significant number of house republicans in particular, and also on the senate. some of those who are strongly opposed to a debt limit increase unless there are substantial cuts in spending -- my sense is that they are deeply, deeply concerned about the fiscal direction of this country, and rightfully so, and are absolutely determined to do something about it in the strongest possible terms. bless them for it. i happen to feel the same way about our fiscal situation. we need to do something, and these people are committed, and in a broad sense if they are driving -- the fact that we are about to get a good down payment on this, is driven, really, by these people. it is a separate question whether one should go past august 2 without a debt limit increase, but i would tell you that these are people that love their country, for what the best

thing for the country, and you might not agree, and i am sure you do not agree with the kind of government they want to have, but their heart is in the right place in terms of want and to address the fiscal situation. host: richard, a republican in kingsport, michigan. you are next. caller: thank you for c-span. if it was not for you, a lot of people would not know what is going on in this country. i'm very scared about social security benefits. i am going to be 68 friday. i have been on social security for just about a year. i cannot go back to work because of my physical condition. i am scared. my dad raised need to pay my bills first, and then go play. i have always believed in that. if we do end up -- how long would we lose our social

security, or how long would that less? i have to pay my bills, sir. i have bills to pay. higher rents, and i cannot afford to buy a house. -- i rent, and i cannot afford to buy a house. i just lost everybody in my family. host: richard, we will try to get an answer to your question. guest:, so, let's look of the history. back in early-1996, there was a similar impasse, not quite as severe, but similar impasse over the debt limit, and then secretary rubin wrote to congress, and said i did not have enough cash to pay the social security benefits in march of 1996, over to you. congress immediately passed a special increase to permit the payment of social security and march until the end of the impasse when the agreement was made and things 14. so, that is a piece of

historical evidence that we have. it does not bind anyone in the current time frame, but it seems to me that social security is an extremely popular program in the united states, and it does not seem to me if likely that either political party would want to be accepting the blame for the non- payment of social security if for any significant time, and by that i mean more than a couple of days. host: dorothy, a democratic caller, kansas city, missouri. dorothy, are you with us? caller: i am with you. thank you for the guests this morning at i watch all the time, and this is about one of the best guess i have ever seen. everybody that is over 65 can wake up to the fact of social security -- what will they do with the money as they changed the age limit? and what will they do with the money that people like my son,

who is 46, that will never see social security, how will they get their money back? host: there is a proposal to raise the age limit -- the age eligibility from 65 to 67. guest: that has not been enacted, and that is not part of the current discussions are going on, but if there is an increase in the social security eligibility age, it would come in very, very gradually, over hey long time. it is not something that would be dropped in all of the sudden. actually, social security is a difficult problem, but it is far from the most difficult problems to six. people generally understand that it must be fixed, and there are a handful of things that can and will be done. it is being treated separately from the deficit talks because it should be, and it is, a self-

funding program, and, again, i think it is well regarded on both sides of the aisle, and i do believe socials 30 will be saved. aid might not happen -- social security will be saved. it might not happen between now and 2012, but it will in the next three or four years. host: and jerome powell is a visiting scholar from the bipartisan policy center, and we're looking at a new study they published about what would happen if the debt limit is not -- debt ceiling is not increased. there's $32 billion in spending that needs to be paid, with social satiric and is being the biggest one parent will go to bear creek, alabama. -- the biggest one. we'll go to bear creek, alabama. go ahead. go ahead. caller: i want to find out